Note

–

Discontinued Operations

July 2019

management and the Board engaged in a review of CTI Balloons and CTI Europe and determined that they are

not

accretive to the Company overall, add complexity to the Company's structure and utilize resources. Therefore, as of

July 19, 2019,

the board authorized management to divest of CTI Balloons and CTI Europe. These actions are being taken to focus our resources and efforts on our core business activities, particularly foil balloons and ancillary products based in North America. The Company determined that these entities met the held-for-sale and discontinued operations accounting criteria. Accordingly, the Company has reported the results of these operations as discontinued operations in the Consolidated Statements of Comprehensive Income and presented the related assets and liabilities as held-for-sale in the Consolidated Balance Sheets. These changes have been applied for all periods presented. The disposal of CTI Europe was delayed due to COVID issues but is expected to be completed in the next

three

months. The Company divested its CTI Balloons (United Kingdom) subsidiary in the

fourth

quarter

2019.

October 2019,

we determined that we would

not

renew our Trademark License Agreement with SC Johnson when it expired on

December 31, 2019.

Under this Agreement, we were licensed to manufacture and sell a line of vacuum sealing machines and pouches under the Ziploc® Brand Vacuum Sealer System. The terms of the Agreement included a run-off provision which allowed us to sell products under the Ziploc® trademark for

days after the end of the Agreement. Our exit of the Ziploc® product line is considered a strategic shift and had a major effect on our operations and financial results. Therefore, this product line has been presented as discontinued operations.

CTI Europe recorded a gain from discontinued operations, net of taxes of

$52,708

and

$317,000

for the

three

months ended

March 31, 2021

and

March 31, 2020,

respectively.

Our Ziploc product line recorded a loss from discontinued operations, net of taxes of

nil

and (

$804,000

) for the

three

months ended

March 31, 2021

and

March 31, 2020,

respectively.

Summarized Discontinued Operations Financial Information

The following table summarizes the major line items for the operations that are included in the income from discontinued operations, net of tax line item in the Unaudited Consolidated Statements of Income for the

three

months ended:

	March 31, 2021			March 31, 2020
Income Statement
Net Sales		79,833			1,057,058
Cost of Sales		126,906			1,174,045

Gross Loss	$	(47,073	)	$	(116,987	)


SG&A		92,266			524,550

Operating Loss	$	(139,339	)	$	(641,537	)

Other Expense		9,963			13,220

Total pretax loss from discontinued operations	$	(149,302	)	$	(654,757	)

Gain from classification to held for sale		250,664			168,120

Net Income (Loss) prior to non-controlling interest	$	101,362		$	(486,637	)

Non-controlling Interest share of profit/loss		48,654			152,094

Net Income (Loss)	$	52,708		$	(638,731	)

The following table summarizes the carrying amounts of major classes of assets and liabilities of discontinued operations for each of the periods presented:

Yunhong CTI Ltd.

Unaudited Consolidated Balance Sheet

	March 31, 2021			December 31, 2020
Balance Sheet
Assets
Current Assets
Cash on hand and Banks	$	75,632		$	195,496
Accounts Receivable		29,398			117,687
Inventory		-			-
Prepaid & Other		60,633			62,275

TOTAL Current Assets		165,663			375,458

NET Property, Plant, and Equipment		6,445			7,471

Other Assets
Operating lease right-of-use		-			129,411
Other		32,543			32,543
TOTAL Other Assets		32,543			161,954
TOTAL Non-Current Assets		38,988			169,425

Valuation Allowance on Assets Held for Sale		-			(250,664	)

TOTAL Assets	$	204,651		$	294,219

Liabilities
Current Liabilities
Trade Accounts Payable		83,229			21,256
Operating Lease Liabilities - Current		-			93,514
Other/Accrued Liabilities		(3,271	)		(2,796	)
TOTAL Current Liabilities		79,958			111,974

Non-Current Liabilities
Operating Lease Liabilities - Non Current		-			35,897
Other Non-Current		35,385			36,706
TOTAL Non-Current Liabilities		35,385			72,603

TOTAL Liabilities	$	115,343		$	184,577

The cash flows related to discontinued operations have

not

been segregated and are included in the Consolidated Statements of Cash Flows. The following table summarizes depreciation from discontinued operations for each of the periods presented:

	Three Months Ended
	March 31,
	2021		2020
Depreciation	$	710	$	154,892